FOR IMMEDIATE RELEASE: March 6, 2019
The City Manager and Mayor welcome the latest bond credit rating affirmations, which note our strong financial policies and practices.
Moody’s Investors Service, S&P Global Ratings and Fitch Ratings have affirmed the ratings on the City of Kansas City’s general obligation debt at Aa2, AA and AA-, respectively. At the same time, the ratings for the City’s outstanding special obligation bonds were affirmed at A1, AA- and A+, respectively. Both S&P and Fitch affirmed the outlook as stable, while Moody’s changed its outlook from negative to stable.
S&P views the City’s management conditions as “very strong, with strong financial policies and practices under our FMA methodology, indicating financial practices are strong, well-embedded, and likely sustainable.” S&P also acknowledged that the City has very strong budgetary flexibility and very strong liquidity.
“The increase in our bond credit ratings is great news for our City and its future, and reflects the hard work, careful planning and fiscal discipline practiced throughout our city government,” Mayor Sly James said.
Moody’s credits the City with stable financial performance that is supported by strong fiscal management and available liquidity outside of the operating funds. Moody’s further notes the stable outlook “reflects our belief that ongoing economic expansion will continue to provide adequate resources to meet the growing demands of the City’s increasing fixed cost burden without crowding out essential government services.”
Fitch notes the ratings “reflect the City’s solid revenue growth prospects” and that “the long-term liability burden is moderate and expenditure flexibility is adequate.” Fitch further notes that “the recently improved reserve levels are strong given the City’s limited inherent budget flexibility and expected revenue volatility, and the City continues to demonstrate consistent efforts in support of financial flexibility.”
The general obligation ratings also apply to the upcoming issuance of the City’s $60.4 million General Obligation Bonds, Series 2019A. The Series 2019A bonds are the second issuance under the 2017 authorization, where voters approved $600 million for streets, bridges and sidewalks, $150 million for flood control, and $50 million for public buildings and ADA projects. Approximately $34 million of the Series 2019A issue will fund street, bridge and sidewalk projects, $11 million will fund flood-control projects, and $15 million will fund public building and ADA projects.
“We are pleased with Moody’s improved outlook for the City. Our financial plan provides the roadmap to fiscal responsibility, and by carefully following that plan, we have built our reserves to the highest level in many years,” said City Manager Troy Schulte. “While the present level of reserves meets the City’s target, we will have to keep working on our debt and pensions in order to maintain or improve our current credit position.”
The City will offer the bonds via competitive sale on or about March 20, 2019. Hilltop Securities, Inc. and Moody Reid Financial Advisors serve the City on the transaction as co-financial advisors. Gilmore & Bell, P.C. and Clayborn & Associates LLC serve as both co-bond counsel and co-disclosure counsel on the transaction.
Media inquiries and requests for information can be addressed to Doug Buehler, City Treasurer, Finance Department at 816-513-1024.